28 April 2022
DS Smith Plc – Pre-close statement
DS Smith Plc (“DS Smith”) today issues a pre-close trading update in respect of the year ending 30 April 2022.
Trading in line with management expectations
- Continued momentum during H2 with good progress in profitability and cash generation.
- Like-for-like corrugated box volume growth of at least 5 per cent for the year.
- Volume growth and continuing packaging price increases have more than offset ongoing input cost increases.
- Expected adjusted operating profit for FY22 in the range of £605 – 615 million.
Strong cashflow, reduced leverage
- Continued strong free cash flow performance for the full year with expected cash conversion over 100 per cent.
- Further reduction in our leverage to approximately 1.7 times as at 30 April 2022 (2.2 times at 30 April 2021).
Update on Ukraine and Russia
- Our only involvement in these countries is a minority investment in a Ukrainian business, which serves customers predominantly in Ukraine with limited sales in Russia. We have no other operations or employees in Russia.
- Due to the invasion and ongoing impact on the business in Ukraine, we are impairing our investment with an anticipated one-off non-cash charge of approximately £30 million in FY22. The contribution to our FY21 results was £4 million after tax.
Miles Roberts, Group Chief Executive, said:
“I am pleased with the continued momentum and performance of the business in another year disrupted by Covid-19 and macro-economic uncertainty amplified by the Russian invasion of Ukraine.
We have seen continued good momentum across our customer base, with volumes from our FMCG customers growing particularly well, underpinned by consistently high levels of service and product quality. Within Europe our Eastern and Southern regions have performed ahead of the Group average, and in the US we are seeing the benefit of the Indiana site contributing to further very strong volume growth in the region.
Strong management of our supply chain and cost base, together with volume growth and increasing packaging prices to recover the increasingly higher input costs, is delivering the expected strong profit growth. It is particularly pleasing to see the performance from areas where we have significantly invested recently, with the North America and Southern Europe regions expected to be the highest margins within the Group, with Europac delivering a very strong operational and financial contribution.
We have continued to make good progress in our sustainability goals and in January 2022 we committed to align our global operations to the sector leading 1.5°C scenario as set out in the Paris Climate Agreement and aligned with the Science Based Targets initiative as well as to net zero CO2 emissions by 2050.
We have continued to invest in our business, leveraging our scale, our deep customer relationships and sustainable innovative solutions to lead the transition to a more circular economy, providing a strong platform for growth. We are mindful of the volatile macro-economic environment but have to date seen little or no evidence of changes to customer behaviour and we enter the next financial year with confidence.”